Watchdog dismisses TRICARE bid protest

The government’s watchdog on Monday denied a protest over a multibillion-dollar contract from a company that provides health care to millions of service members and their families.

TriWest Healthcare Alliance lost its bid protest over the Defense Department’s March decision to award a $20.4 billion contract to UnitedHealth Group to manage TRICARE, the military’s vast health care system. TRICARE covers 2.9 million active-duty and retired service members and their families, and Phoenix-based TriWest has managed the program in the western part of the country for more than a decade. Defense in 2009 re-awarded the TRICARE contract to TriWest, but UnitedHealth Group protested that decision, which led the department to reissue its solicitation for bids.

The Government Accountability Office, which rendered the decision, said Defense’s evaluation of the contract award to UnitedHealth was reasonable and rejected TriWest’s protest on all counts. “Although GAO’s decision denied the challenges raised by TriWest, the decision expresses no view as to the merits of these firms’ respective proposals,” Ralph O. White, GAO’s managing associate general counsel for procurement law, said in a statement.

TriWest will explore whether it can take action in response to GAO’s decision.

“Given our 16-yearlong commitment to providing access to care for military families across the West Region, we are extremely disappointed by the GAO’s findings regarding our protest,” stated TriWest President and Chief Executive Officer David J. McIntyre Jr. “We will be discussing this decision with our company’s owners and the counsel who represent us, and will, in turn, be making a decision on what, if any, action we will take in response to the GAO’s denial of our protest.”

TriWest’s current TRICARE contract runs through March 31, 2013. UnitedHealth Military and Veterans Services, which is part of UnitedHealth Group, is set to begin managing the program in April 2013.

TriWest expressed concerns with the contract award to UnitedHealth, arguing that UnitedHealth did not have experience in military health care management and the company would not offer the best value to enrollees. TriWest’s contract bid was lower UnitedHealth’s bid.

“UnitedHealth Military and Veterans Services is honored to be able to put our expertise and experience to work on behalf of TRICARE West beneficiaries, and we look forward to working with the Defense Department and the incumbent contractor to ensure a smooth transition for service members, retirees and their families,” Lori C. McDougal, CEO of UnitedHealth Military and Veterans Services, said in a statement. “We are committed to working with the Department of Defense to ensure beneficiaries have access to cost-effective, quality and innovative care.”

A March story in The Washington Post said TriWest paid the government $10 million in September 2011 to settle a whistleblower lawsuit claiming it pocketed savings that should have been passed along to the government. TriWest spokesman Scott Celley told the newspaper the problem was over “clerical errors.”

GAO has not yet released the official decision on the bid protest because it contains proprietary and source selection sensitive information. The watchdog asked the companies’ lawyers to identify that information so the agency can release a public version of its decision.